NEW DELHI: Discoms finally have a way out of purchasing "costly" electricity from central sector plants as the Delhi Electricity Regulatory Commission (DERC) has directed them not to renew power purchase agreements (PPAs) which are lapsing in the near future. Agreeing to the stand taken by Delhi government, the regulator said that they concur with the discoms that these PPAs contribute to higher tariffs. Since there is no exit clause, power companies will have to wait for the agreement to lapse.

Sources said that the directive could be part of the tariff order scheduled to be announced early next month. The commission is under immense pressure not to hike electricity tariffs and has already hinted that such a step may not be taken.

"There are a number of PPAs which are coming up for renewal and we have told discoms to let them lapse as power from these plants is costly. We know the average cost of power is based on what is prevailing at the exchange and anything above that price is costly. Electricity is available at comparative rates at the exchange, which can be purchased by the discoms. PPAs with plants like Aravalli still have many years to go before they lapse, so discoms can't get out of these," said senior DERC officials.

PPAs with three central sector plants -Anta, Auraiya and Dadri -lapsed recently , but the discoms renewed them without DERC approval. This led to the commission denying adjustment of power purchase costs from these stations to the discoms in its order in June. Sources said that the PPA with Rajghat power plant will lapse soon, with Singrauli to follow in the next few months. Discoms, however, said that getting out of the PPAs is no easy task.

"We have been making this demand for a long time.By getting out of PPAs and procuring power from cheaper sources, which is readily available, we can help bring down tariffs. But regulations say that till the plants are operational and functioning, the PPAs will continue," said discom sources.

Senior officials from the power ministry said that Delhi could not be allowed to surrender PPAs till alternate buyers were found. Last month, Delhi government had written to the Union power ministry saying they wanted to surrender 2200MW from central sector stations and asked that it be re-allocated to other needy states. The ministry has not yet formally replied to the proposal.